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Growth in Division I athletics expenses outpaces revenue increases

And no Division II or Division III institutions generate more revenue than they spend, according to a recent study.

August 20, 2014 11:04amBrian Burnsed

Revenue generated by athletics through ticket sales, broadcast agreements and other sources continues to rise among Division I schools, but athletics-related expenses are climbing at a quicker pace, according to a report detailing revenues and expenses among NCAA institutions in 2013.

Expenses exceeded generated revenue at all but 20 schools in the Football Bowl Subdivision. The average loss among the five highest-resource conferences was $2.3 million, but was much higher — $17.6 million — at all other FBS schools. From 2012 to 2013, median annual generated revenues (all athletics revenues excluding those allocated through the government, the school or through student-activity fees) increased by 3.2 percent, yet median total expenses rose by 10.6 percent.

Athletic departments outside of the 20 schools whose revenues exceeded their expenses close the gap through subsidies provided by their institutions. But at the median Division I school, the athletics budget rose more quickly than the institutional budget, requiring the athletics department to take a larger percentage of institutional funds.

“If the trend of athletic spending outpacing institutional spending continues, institutions will need to be able to justify that spend to the university community and the general public,” said NCAA Chief Financial Officer Kathleen McNeely. “The value that athletics brings to campus life, life-long connection to alumni, and enhancing diversity on campus are all important outcomes from athletic programs that need to be celebrated and shared.”

Division II and Division III revenues and expenses were also examined in separate reports. In Division II, athletics aid given to student-athletes has continued its decade-long rise, nearly doubling at schools without football programs over the past 10 years. In Division III student-athletes accounted for 20 percent of the student body, but athletics represented only 4 percent of overall institutional expenses, on average, in the 2013 fiscal year.

More highlights from the 2013 reports:

Division I

Football Championship Subdivision schools did not follow the trend in FBS. With their generated revenue increases outpacing the jump in expenses. Generated revenues have jumped by 10.1 percent since 2012, while expenses increased by only 8 percent over the same timeframe.

Median total expenses at institutions in the five highest-resource FBS conferences (ACC, Big Ten, Big 12, Pac-12 and SEC) was $81.7 million. The median at FBS schools outside those five conferences was $28.8 million.

Schools in the five highest-resource conferences rely on generated revenue much more heavily than their other FBS counterparts. Of $83.6 million in median total revenues at the highest-resource schools, 89 percent ($74.8 million) was generated by the athletic department. At other FBS schools, athletics generated only 40 percent ($11.6 million) of total revenues.

Since 2004, median generated revenues have increased at all FBS schools by 83.2 percent. At FCS schools, they have jumped 82.5 percent and schools without football have seen revenues climb by 62.5 percent. Over the same decade, expenses at FBS schools have climbed 114.6 percent. They jumped 88.4 percent at FCS schools and 95.5 percent at schools without football. In each instance, the increase in expenses has outpaced the growth of generated revenue, a gap that has accelerated with time.

Division II

No Division II institution’s generated revenues exceeded its expenses. In fact, the median cost for Division II institutions with football to subsidize their athletic departments was $4.8 million. At schools without football, the median cost to subsidize athletics was $3.8 million.

The overall cost to institutions of running a Division II athletics program with football (the difference between generated revenues and expenses) has grown 103.4 percent through the past decade. It has jumped 92.5 percent over the same timeframe for schools without football.

Median generated revenue at Division II institutions with football ($640,000) is nearly double that of institutions without football ($336,000), yet the total expenses incurred by Division II institutions with football ($5.6 million) were only 26 percent higher than institutions that didn’t have football ($4.2 million).

While generated revenues have climbed steadily over the past decade for Division II schools with football (66.7 percent), overall revenues have increased nearly twice as fast. Schools with football programs receive more funding for their institutions; total revenue at football schools has jumped nearly 122 percent through the past 10 years.

Through the past decade, athletics aid per student-athlete has jumped from roughly $4,000 to $6,500 at non-football schools and from $2,500 to nearly $5,000 at football schools.

Division III

Given Division III’s large size – more than 400 institutions – and the diversity of school size within the division, there were large ranges of both revenues and expenses. Total revenues at schools with football ranged from $275,000 to $14.1 million and from $232,000 to $9.6 million at schools without football. The same disparities held true for total expenses, ranging from $785,000 to $14.1 million at football schools and $422,000 to $9.2 million at non-football schools.

As with Division II, generated revenues did not exceed expenses at any Division III institution.

The overall athletic expense per student-athlete at Division III institutions is $7,100.